Latin America Advances, as US Dawdles

By
Peter Hakim /
December 26, 1997

This was a good year for Latin America. The region's economies grew faster than in any single year since the onset of the debt crisis in 1982. Democratic politics also gained more ground as electoral results in key countries sharply expanded political competition.

In contrast, United States policy toward Latin America - despite President Clinton's two successful visits to the region - continued to drift. The administration's failure to secure fast-track negotiating authority, increasingly viewed as emblematic of US commitment to hemispheric cooperation, was particularly disappointing.

Latin America's economies have expanded by nearly 5-1/2 percent this year, the highest rate in 15 years. Average inflation will drop to just over 10 percent, the lowest in the region in memory. External capital flows reached a record $74 billion. Trade continues to increase, and unemployment is declining in most places.

All this suggests the painful economic reforms that Latin American governments have been putting in place over the past decade are taking root and producing results. Although performance is still uneven across countries, an extended period of growth may well be on the horizon.

Despite the victory of opposition candidates in many recent elections, nowhere in Latin America is there any serious consideration of abandoning, or even significantly modifying, liberalizing economic policies.

The strong economic performances of Mexico and Argentina are especially noteworthy. They demonstrate a remarkable recovery from the deep crises affecting both countries just two years ago.

The market turbulence in Asia threatens Latin America's economies, and has already provoked a modest recession in Brazil. But the decisive response of the Brazilian government seems to have so far warded off the worst dangers, and may have kept the "contagion effect" largely out of Latin America. The continued strengthening of Mercosur - Latin America's largest regional trade group, which includes Brazil, Argentina, Paraguay, and Uruguay and recently added Bolivia and Chile as associate members - was another important contribution to the region's economic prospects.

The political news, in most places, also was encouraging. Mexico held its most competitive elections ever and, for the first time in more than half a century, the president and the PRI governing party have had to share power with an opposition-controlled Congress and a opposition mayor in Mexico City.

Political choice widened in Argentina and El Salvador, where politics had become increasingly dominated by a single party, as opposition movements gained ground in congressional elections.

The peace agreement reached between government and guerrillas opens the way for expanded, more-open political participation in Guatemala.

The approval this year of a constitutional amendment allowing presidential reelection offers Brazil the prospect of more-stable politics and continuing effective government.

In Ecuador, the formation of a new constitutional congress, under able leadership, opens the way for reform in a country known for its predatory politics.

Guyana's electorate - about equally divided between citizens of African and Indian descent - gets the prize for open-mindedness, having just elected a Jewish woman born in the United States as its president.

Tensions, too

Not everything is rosy in Latin American politics, however. Civil-military tensions worsened in Paraguay and threaten its nascent democratic politics. The Fujimori government in Peru became even more authoritarian and less tolerant. Haiti's economic and social situation is deteriorating as democratic politics has so far produced chaotic and ineffective rule. Overwhelmed by criminal and guerrilla violence and unable to control human-rights abuses or the drug trade, Colombia's government has been discredited. The hope is that next year's presidential elections will allow for new, more-serious efforts to stem the violence and re-establish the rule of law. But these were the exceptions.

Latin America last year enjoyed broad economic progress and invigorated political democracy. But US policy needs to catch up. With or without fast track, Washington has to demonstrate its continuing commitment to hemispheric free trade and economic integration - as the basis of wider inter-American cooperation.

That is what Latin America's presidents will be looking for when they join President Clinton in Santiago, Chile, in April for the second Summit of the Americas.

* Peter Hakim is president of the Inter-American Dialogue and a regular contributor to the Monitor.